Digital Out-of-home Video Is Now Among the Fastest Growing Ad-Supported Media

August 8th, 2008 Nurlan Urazbaev

Digital signage advertising “will be among the fastest growing ad-supported media over the next few years, and will begin to rival traditional outdoor advertising by 2012,” writes Joe Mandese of MediaPost in today’s Digital Outsider newsletter and blog. The author reviews the results of this week’s edition of VSS’ annual Communications Industry Forecast, published by Veronis Suhler Stevenson, and consultant PQ Media.

According to the updated report, “the “alternative” out-of-home media sector will grow at a compound annual rate of 22.5% through 2012, which is considerably faster than the overall growth of the U.S. advertising marketplace, and only a slight slowdown from the 24.6% annual rate of growth the medium experienced over the past five years.

Based on those projections, VSS estimates alternative out-of-home ad spending won’t be so alternative by 2012, when it will total nearly $6 billion, and account for nearly half (46.4%) of the entire out-of-home advertising marketplace. That compares with a tepid 3.8% rate of annual growth for traditional outdoor ad spending through 2012.”

…  “While video ad networks remains the largest alternative OOH category, digital billboards and displays grew the fastest in 2007, due to the strong rollout of new at-road signs, primarily from Lamar and Clear Channel. Spending on digital billboards increased 59.7 percent in 2007 to $372.0 million,” writes the Digital Outsider, quoting the report.

The forecast “likens the digital out-of-home ad marketplace to the explosive growth of the early Internet’s, but cautions that the growth will not come without challenges, including the impact of a general economic downturn that is expected to last through next year. Despite the positive outlook, the digital out-of-home business faces challenges,” the report warns. “In the short term, the sector is untested in an economic slowdown, although it was holding up well in the first half of 2008. Second, while major brands are pressuring their agencies to take a closer look at digital OOH, agencies are demanding more and better measurement on the effectiveness of digital out-of-home advertising. This will be key to the struggle [of] digital out-of-home,” reports Joe Mandese.

The VSS reports also validates our previous predictions that digital signage has a much bigger potential for accountability than any other media: “While macro economics may be somewhat out of the control of digital outdoor media purveyors, VSS notes that the industry is taking proactive steps, including efforts by the Outdoor Video Advertising Bureau, the Traffic Audit Bureau, and individual companies, to accelerate better measurement and ROI metrics.

“Cutting-edge measurement, particularly engagement metrics such as new ‘eye-dwell’ technology, has the potential to make digital out-of-home spending a prominent component of media plans in the future,”" the analysts forecast.

“Improved metrics, and accountability, coupled with increasingly mobile consumer lifestyle patterns, and a shift away from static video advertising, meanwhile, is expected to accelerate digital out-of-home advertising’s share of the outdoor medium, as well as the overall advertising marketplace,” quotes the Digital Outsider.

Ironically, traditional agencies are still referring to network TV, radio and print as “measured” media, and put all new media, including the Internet and digital signage  into the “unmeasured” category. Ad Age’s 100 Leading National Advertisers report says : “unmeasured disciplines, primarily marketing services such as direct marketing, promotion and digital communications (including unmeasured forms of internet media such as paid search).” (Ad Age, June 23, 2008)

I understand that “unmeasured” means not measured by traditional yardsticks like TNS, Nielsen or Arbitron, but what other means of communication has more potential of being tracked and analyzed than digital, which, as we see, is already being measured in a myriad of ways?

The same publication, Ad Age, in its July 15 editorial contradicts the LNA report: “… the drive to digital is providing new ways to measure multimedia efforts and proving a catalyst that’s bringing this movement to fruition.”

It’s just a question of bringing existing but disparate data to some common denominators. Hopefully, the OVAB’s long-awaited Audience Metrics Guidelines and other research initiatives will help introduce standards, starting with their fast-expanding list of member-networks.  

While the economic slowdown is hurting the traditional “measured” media, the so-called “unmeasured” digital and Outdoor media seem to be doing great. Digital out-of-home is fitting into both categories, so we are in good shape so far…

I expect that this outdated classification will disappear from the trade lexicon in the near future, the same way as we no longer hear about “above the line” or “below the line” media any more…

In the meantime, the “unmeasured” media is running full steam ahead…

Entry Filed under: Digital Signage Evolution, Digital Signage ROI, The Big Picture, Uncategorized